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Introduction & Market Context
Victory Capital Holdings (NASDAQ:VCTR) presented its first quarter 2025 earnings results on May 9, 2025, highlighting a mixed performance with strong ETF flows and the strategic impact of its recent Amundi partnership. The asset manager reported total client assets of $171.4 billion, down from $176.1 billion in the previous quarter, while maintaining strong profitability metrics with an adjusted EBITDA margin of 53.0%.
The quarter was marked by the company’s strategic partnership with Amundi, with the acquisition of Pioneer Investments closing on April 1, 2025, significantly expanding Victory Capital’s scale and global reach. This transformative deal adds $115 billion in assets under management, bringing the combined total to $286 billion.
Quarterly Performance Highlights
Victory Capital reported Q1 2025 revenue of $219.6 million, down from $232.4 million in Q4 2024. The company achieved adjusted earnings per diluted share with tax benefit of $1.36, while GAAP earnings per diluted share came in at $0.96. Adjusted EBITDA for the quarter was $116.4 million with a robust margin of 53.0%, marking the 15th consecutive quarter with margins at or above 50%.
As shown in the following business overview, the company maintained strong profitability despite market challenges:
Long-term gross flows increased 41% compared to the previous quarter, reaching $9.3 billion, though net flows remained negative at -$1.2 billion. A notable bright spot was the ETF segment, which generated $3.1 billion in gross flows and $2.8 billion in net flows, demonstrating strong momentum in this growing product category.
The following chart illustrates the company’s total client assets over recent quarters:
Despite the overall negative net flows, Victory Capital showed improvement compared to previous quarters, with net outflows decreasing from -$1,729 million in Q4 2024 to -$1,205 million in Q1 2025. The company noted that two large redemptions offset otherwise positive net flows for the quarter.
Revenue for the first quarter was impacted by market action, a reduction in average AUM, fewer days in the quarter, and product mix shift. The average fee rate declined from 52.5 basis points in Q4 2024 to 51.2 basis points in Q1 2025.
Strategic Partnership with Amundi
A central focus of the presentation was Victory Capital’s strategic partnership with Amundi, which significantly expands the company’s scale and diversification. The combined entity now manages $286 billion in assets with projected net expense synergies of $110 million.
The partnership creates a more balanced asset mix across equity (27%), fixed income (43%), and solutions (28%), while also diversifying distribution channels and geographic exposure, with 15% of assets now coming from outside the United States:
Victory Capital highlighted how this partnership enhances its distribution capabilities, with expanded coverage across both U.S. and international markets. The client base now extends to more than 60 countries, with local presence in 35 countries through Amundi’s distribution networks:
Investment Performance
Victory Capital emphasized its commitment to long-term investment performance, with 45 mutual funds and ETFs receiving 4- or 5-star overall ratings. These highly-rated funds represent 67% of the company’s mutual fund and ETF assets under management.
The company’s investment performance relative to benchmarks showed strength over longer time periods, with 79% of AUM outperforming benchmarks over a 10-year period:
Capital Management & Shareholder Returns
Victory Capital ended the quarter with $176 million in cash and cash equivalents and $972 million in debt, resulting in a net debt to adjusted EBITDA ratio of 1.7x. The company returned $39 million to shareholders during the quarter and increased its quarterly cash dividend by 4% to $0.49 per share.
The following slide details the company’s capital management position:
The company has maintained a consistent capital allocation strategy focused on enhancing shareholder value through strategic acquisitions, organic growth initiatives, and returning capital to shareholders. Since its IPO in February 2018, Victory Capital has returned a total of $903 million to shareholders through dividends and share repurchases:
This strategy has contributed to significant shareholder value creation, with a total shareholder return of 415% since the company’s IPO, while reducing diluted shares outstanding from 72 million to 65 million:
Forward-Looking Statements
Looking ahead, Victory Capital is focused on realizing synergies from the Amundi partnership, with long-term guidance of a 49% adjusted EBITDA margin once synergies are fully realized. The company expects to benefit from enhanced distribution capabilities and greater scale, particularly in international markets.
Management highlighted the ongoing strength of its ETF business and noted that Pioneer Investments generated positive net flows of $1.7 billion in Q1 2025, which were not included in Victory Capital’s reported numbers as the acquisition closed on April 1.
The company remains committed to its long-term growth strategy, which includes improving its platform with strategic acquisitions, evolving its product set to drive organic growth, gaining efficiency from its integrated platform, and maintaining balance sheet flexibility to support future growth opportunities.
Full presentation:
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